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Offshore Transmission (OFTO) Regime by Ofgem and DECC Fully Commences

11 Jun 2014

The 10th of June marked a milestone, as the offshore transmission regime set up by Ofgem and the Department of Energy and Climate Change (DECC) fully commences. Full commencement means that from today the laws supporting the regime take full effect. Ofgem now regulates and licenses the transmission of electricity generated in Britain’s territorial waters at 132kV or above.

The Generator Commissioning Clause gives greater certainty to wind farm developers that choose to build the transmission systems themselves. It gives them an 18-month period to legally test transmission systems before transferring them to an offshore transmission owner. This will reassure offshore transmission owners and investors that the transmission assets they are buying have been fully tested.

The changes will enable Ofgem to attract further investment and achieve significant savings for consumers. £1.4bn of investment has already been attracted from a variety of new sources and £1.5bn is currently in the tender process. Developers recovering the capital invested through the tender process will be able to reinvest in future projects, promoting economic growth.

Ofgem is currently consulting on an independent report that estimates that through competition and appropriate allocation of risks, the regime has already saved consumers between £200m and £400m. As future projects will be further from shore and more complex, Ofgem’s competitive tendering approach could achieve further savings.

Story appears courtesy of Ofgem.